European Equity Strategy: Simply Europe: Fewer laggards. More winners.

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European Equity Strategy: Simply Europe: Fewer laggards. More winners.

Global Research

15 July 2026ab

European Equity Strategy Equity Strategy

Europe including UKSimply Europe: Fewer laggards. More winners.

Gerry Fowler

Strategist

Key takeaways gerry.fowler@ubs.com

+44-20-7567 5490

A broader bull case for Europe - We recently upgraded our Stoxx 600 target to 690

having become positive on the European equity outlook again. The key change is Sutanya Chedda

Strategist that multiple themes are starting to align for performance and the bottom-up

sutanya.chedda@ubs.com

news seems to be coming in quite a bit stronger than the macro backdrop. Europe +44-20-7567 8155

is no longer reliant on a narrow group of AI enablers or the banking sector to drive

performance; a growing number of sectors and industry groups now have

supportive earnings trends on modest to fair valuations and positioning.

Four reasons our view has improved – Our more constructive stance reflects four

developments: 1) the AI enablement earnings upgrades have been strong and we

think will be again this earnings season; 2) The US cycle looks to be accelerating -

more EU industrials should benefit and perhaps Europe is due a restocking cycle

too?; 3) Banks continue to generate positive revisions on solid loan growth and 4)

Previous laggard sectors have stabilised their profits so are no longer a drag on the

index. Together, these factors create a stronger and more durable investment case

than we saw in recent months.

Fiscal spending is ramping up finally – The most notable change over recent

months has been the growing attractiveness of fiscal spending beneficiaries.

Defence remains the most obvious expression of this theme, but opportunities are